On May 29, 2000, Regulation 1346/2000 of the European Council went into effect. The Regulation was intended to harmonize insolvency proceedings throughout the EU and to discourage "bankruptcy shopping", where potential bankrupts transfer their companies or actual persons to jurisdictions that have more lenient insolvency laws. The Regulation has helped with the former goal, but the latter goal is proving to be a tricky matter.
Check out this story from thisismoney about bankruptcy tourists who are leaving other European countries in droves to start new lives in England in order to take advantage of England's more lenient insolvency laws. Kent seems to be the hot spot right now, especially for German bankrupts.
This situation has many potential implications for the future of the Regulation. Primarily, if this situation continues and expands, England could eventually change its own insolvency laws. This could also lead to further amendments in the Regulation.
Insolvency practices almost always raise questions of legal ethics, and this is no exception. As the article points out, the ethics of this situation in England are questionable, but the practice is technically legal.
What are your thoughts about this? Is it ethical for insolvency practitioners to encourage this behavior? Will this situation lead to changes in English or EU law?
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